North Carolina-based Fidelity Bank agreed to spend $1 million dollars over the course of two years to boost lending in predominantly minority census tracts. Fidelity will also provide fair lending training to staff – including loan originators, processors and underwriters – and work to make their non-discrimination policies more visible and available both in English and in Spanish.

Velasquez’s remarks contain an important lesson for mortgage lenders – one that we’ve seen again and again as institutions find themselves fending off allegations of unfair practices.

Know Your Numbers

HUD, the CFPB and other regulatory agencies are concerned with rooting out patterns of discrimination whether or not an institution is intentionally engaging in these practices. This means that even if your institution is not knowingly discriminating against applicants, if a statistical analysis of your lending patterns contains discrepancies, you could find yourself in a similar situation.

With regulators and watchdog groups constantly on the lookout for these practices, if you are not carefully monitoring for discrepancies, you could find yourself in a similar situation to Fidelity. In today’s regulatory climate, a fair lending monitoring program is no longer optional. It is a necessity.

The press release from HUD says that 28 percent of all fair housing complaints last year cited race as a factor. The lesson here is that every lender must be watching for indications that they may be treating applicants differently.

The exact monitoring program that is appropriate for your institution depends on many factors such as bank size, complexity, market area and products being offered. Preiss&Associates would be happy to help you determine the best fit for you.

Don’t Wait to Act

And if you already have a program in place that has indicated you may be treating applicants differently, steps should be taken to remedy the situation immediately. The most appropriate solution depends on the specifics of the case. If steps aren’t taken, however, you can trust that regulators will seek to remedy the problem for you.

And in almost every case, the regulator will want the borrower to be made whole at significant cost to you.